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Rectification of error step by step Sale of an old car for 10000, whose book value is 6000 , was wrongly entered into the credit side of sales a/C for 6000?
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Rectification of error step by step Sale of an old car for 10000, whos...
Rectification of Error: Sale of an Old Car
To rectify the error of wrongly entering the sale of an old car for 10000 into the credit side of the Sales Account for 6000, the following steps need to be taken:
Step 1: Identify the Error
- The error occurred when the sale of the old car was recorded at a lower value (6000) than the actual sale price (10000).
- This resulted in an understatement of sales and an incorrect balance in the Sales Account.
Step 2: Determine the Correct Entry
- The correct entry should reflect the actual sale price of the old car, which is 10000.
- This means that the credit side of the Sales Account should be increased by the difference between the actual sale price and the wrongly recorded amount, i.e. 4000.
Step 3: Journal Entry to Rectify the Error
The journal entry to rectify the error would be as follows:
Sales Account (Credit Side) 4000
To Old Car Account 4000
- The Sales Account is credited to increase the credit side by 4000, rectifying the understatement.
- The Old Car Account is debited to reflect the correct sale price of the old car.
Step 4: Posting the Journal Entry
- The above journal entry needs to be posted to the respective ledger accounts.
- In the Sales Account, the credit side is increased by 4000, bringing the balance to the correct amount.
- In the Old Car Account, the debit side is increased by 4000, reflecting the correct sale price.
Step 5: Verification
- After posting the journal entry, it is essential to verify if the rectification has been done correctly.
- The balance in the Sales Account should now reflect the actual sale price of the old car (10000).
- The Old Car Account should show a debit entry of 10000, representing the sale proceeds.
Conclusion
By following the above steps, the error of wrongly entering the sale of an old car for 10000 into the credit side of the Sales Account for 6000 can be rectified. It is crucial to identify the error, determine the correct entry, make the necessary journal entry, post it to the ledger accounts, and verify the rectification to ensure accurate financial reporting.
To rectify the error of wrongly entering the sale of an old car for 10000 into the credit side of the Sales Account for 6000, the following steps need to be taken:
Step 1: Identify the Error
- The error occurred when the sale of the old car was recorded at a lower value (6000) than the actual sale price (10000).
- This resulted in an understatement of sales and an incorrect balance in the Sales Account.
Step 2: Determine the Correct Entry
- The correct entry should reflect the actual sale price of the old car, which is 10000.
- This means that the credit side of the Sales Account should be increased by the difference between the actual sale price and the wrongly recorded amount, i.e. 4000.
Step 3: Journal Entry to Rectify the Error
The journal entry to rectify the error would be as follows:
Sales Account (Credit Side) 4000
To Old Car Account 4000
- The Sales Account is credited to increase the credit side by 4000, rectifying the understatement.
- The Old Car Account is debited to reflect the correct sale price of the old car.
Step 4: Posting the Journal Entry
- The above journal entry needs to be posted to the respective ledger accounts.
- In the Sales Account, the credit side is increased by 4000, bringing the balance to the correct amount.
- In the Old Car Account, the debit side is increased by 4000, reflecting the correct sale price.
Step 5: Verification
- After posting the journal entry, it is essential to verify if the rectification has been done correctly.
- The balance in the Sales Account should now reflect the actual sale price of the old car (10000).
- The Old Car Account should show a debit entry of 10000, representing the sale proceeds.
Conclusion
By following the above steps, the error of wrongly entering the sale of an old car for 10000 into the credit side of the Sales Account for 6000 can be rectified. It is crucial to identify the error, determine the correct entry, make the necessary journal entry, post it to the ledger accounts, and verify the rectification to ensure accurate financial reporting.
Community Answer
Rectification of error step by step Sale of an old car for 10000, whos...
Sales A/c Dr 6000 To Car A/c 6000
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Rectification of error step by step Sale of an old car for 10000, whose book value is 6000 , was wrongly entered into the credit side of sales a/C for 6000?
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Rectification of error step by step Sale of an old car for 10000, whose book value is 6000 , was wrongly entered into the credit side of sales a/C for 6000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Rectification of error step by step Sale of an old car for 10000, whose book value is 6000 , was wrongly entered into the credit side of sales a/C for 6000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Rectification of error step by step Sale of an old car for 10000, whose book value is 6000 , was wrongly entered into the credit side of sales a/C for 6000?.
Rectification of error step by step Sale of an old car for 10000, whose book value is 6000 , was wrongly entered into the credit side of sales a/C for 6000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Rectification of error step by step Sale of an old car for 10000, whose book value is 6000 , was wrongly entered into the credit side of sales a/C for 6000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Rectification of error step by step Sale of an old car for 10000, whose book value is 6000 , was wrongly entered into the credit side of sales a/C for 6000?.
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